By Rob Otman
MSC Industrial Direct (NYSE: MSM) is a mid cap company that operates within the trading companies industry. Its market cap is $6 billion today, and the total one-year return is 23.14% for shareholders.
MSC Industrial Direct stock is beating the market, and it reports earnings next week. But does that make it a good buy today? To answer this question, we’ve turned to the Investment U Stock Grader. Our Research Team built this system to diagnose the financial health of a company.
Our system looks at six key metrics…
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✗ Earnings-per-Share (EPS) Growth: MSC Industrial Direct reported a recent EPS growth rate of 16.05%. That’s below the trading companies industry average of 62.60%. That’s not a good sign. We like to see companies that have higher earnings growth.
✓ Price-to-Earnings (P/E): The average price-to-earnings ratio of the trading companies industry is 29.80. And MSC Industrial Direct’s ratio comes in at 22.50. It’s trading at a better value than many of its competitors.
✓ Debt-to-Equity: The debt-to-equity ratio for MSC Industrial Direct stock is 46.50%. That’s below the trading companies industry average of 111.04%. The company is less leveraged.
✓ Free Cash Flow per Share Growth: MSC Industrial Direct’s FCF has been higher than that of its competitors over the last year. That’s good for investors. In general, if a company is growing its FCF, it will be able to pay down debt, buy back stock, pay out more in dividends and/or invest money back into the business to help boost growth. It’s one of our most important fundamental factors.
✓ Profit Margins: The profit margin of MSC Industrial Direct comes in at 7.61% today. And generally, the higher, the better. We also like to see this margin above that of its competitors. MSC Industrial Direct’s profit margin is above the trading companies average of -43.76%. So that’s a positive indicator for investors.
✓ Return on Equity: Return on equity tells us how much profit a company produces with the money shareholders invest. The ROE for MSC Industrial Direct is 18.31%, and that’s above its industry average ROE of 8.41%.
MSC Industrial Direct stock passes five of our six key metrics today. That’s why our Investment U Stock Grader rates it as a Strong Buy.
Please note that our fundamental factor checklist is just the first step in performing your own due diligence. There are many other factors you should consider before investing. That’s why The Oxford Club offers more than a dozen newsletters and trading advisories all aimed at helping investors grow and maintain their wealth.
If you’re interested in finding Strong Buy stocks yourself, check out Fundamental Analysis Pro. It’s a free five-part mini-course that will teach you how to grade stocks like a Wall Street veteran. Click here to learn more. …read more
Source:: Investment You
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